By John Rau, SCORE Orange County Business Mentor
When you’ve got that “entrepreneurial spirit” and want to start your own business, a common question that many “up-start entrepreneurs” need to address is whether or not they should quit their day job and, if so, when. Not easy questions to answer as they depend on many factors, but here is some guidance as to how to proceed.
I suggest that an easy way to approach answering these types of questions is to conduct your thinking in three distinct phases as follows:
Phase 1 – The Thinking About It Phase
Phase 2 – The Planning Phase
Phase 3 – The Doing It Phase
The Thinking About It Phase begins with the first question you ask yourself which is “Why do you want to do this and why now?” Here are the types of issues, questions and concerns you need to address:
1. You need to think through the reasons for wanting to start your own business such as more money, more flexibility, more freedom, don’t like your current job and/or boss, not going anywhere, looking for a better work environment, hate corporate America or whatever. Some people who think they want to be entrepreneurs are just unhappy with their current roles. Quitting a job with guaranteed income and benefits to pursue a new opportunity full of risks and unknowns (such as starting a new business) may not necessarily be the right answer. You need to take the time to truly consider what you want from a business.
2. Do you have any business training such as in the areas of marketing, business operations, finance and accounting, management, human relations and employment, etc.? Just because you have a college degree in business doesn’t necessarily mean you know how to run a business!
3. Are you thinking about opening a business in an industry that you are familiar with? If not, then you need to assess your ability to start up a business in an area that you know nothing about. It’s best to do some preliminary research and “test the waters” by investigating the market potential for your business concept while you’re still working. You should at least understand who your likely customers would be and what type of competition you would face.
4. You need to assess the risks involved giving consideration to your current financial responsibilities such as mortgage, car payments, credit card obligations and other debts, kids in college, medical bills, etc. Having a working spouse/partner may be necessary to subsidize current financial obligations while moving forward with your new business where you may not see a significant revenue stream for months. (Note: I always advise my clients to have their wives keep their school teacher jobs just in case things don’t work out.)
5. How do you plan to run your business—partners, family members, investors, yourself with or without part-time help, form some type of corporation, etc.?
6. To help ease the transition, you should share your entrepreneurial plans with family members to see if they support the tradeoffs involved in starting a business. If your family members and other members of your “support network” are reluctant to back your idea, then you may want to rethink quitting your current job. You don’t want to be the “Lone Ranger without Tonto”!
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